World View & Market Commentary. Forest first; Trees second. Focused on Real & Knowable facts that filter through the "experts" fluff and media hyperbole. Where we've been, what the future may hold and developing a better way forward.

Friday, October 28, 2011

Equity futures are lower this morning following yesterday’s moneyness/ leverage fluff fest. The dollar and bonds are recovering a small part of yesterday’s losses, the Yen continues into record territory, oil is down slightly, gold & silver are holding onto yesterday’s gains, and food commodities are slipping slightly.

Yesterday was a sad, sad day for America, did you miss it? What the media and your government didn’t tell you yesterday was that America’s advertised debt (reality is WAY higher) surpassed 100% of the nation’s GDP? No, all you heard on the news was that trumped up GDP supposed “grew” by 2.5%. But remember, debt is money inside of the central banker box, and thus it is the growth of debt/money that you are seeing as “growth.” Do not believe the lies, remember that lying is a cooperative act, do not give the purveyors of fraud permission to lie!

Speaking of moneyness lies, Personal Income supposedly rose by .1% in September while Consumer Spending supposedly rose by a whopping .6%! Those figures are supposedly up 4.4% and 5.3%, respectively, year over year, not that I believe for a second that Personal Income is actually up by that amount. The first flaw in this report is that they do not disseminate the actual dollar figures they are measuring, they convert them into percent moves. Here again, because they measure inflation incorrectly (understated), these figures are distorted to the high side. Thirdly they fail to average in the “income” that’s missing from the unemployed! Fourthly, these statistics fail to point out that those closest to the production of money are seeing giant leaps in income, while those who are further away are taking it on the chin with lower wages and a higher percentage of temporary and part-time work. Even if we take these numbers at face value, then they are high and it is clear that the “Fed” is failing in their price stability mandate, thus how do they justify more “stimulus” and printing? Oh, that’s right, they’re not printing money, just ask them. Here’s Econoday giving their blessing to the lies:

HighlightsPersonal income rose modestly in September but wages & salaries were healthy. Meanwhile, spending was up notably while inflation was mixed. Personal income in September edged up 0.1 percent, following a 0.1 percent dip in August. The latest number fell short of the consensus forecast for a 0.3 percent gain. Importantly, the wages & salaries component rebounded 0.3 percent, after declining 0.1 percent in August. Sluggishness in income was from a dip in interest income and from flat government benefits.

Turning to inflation numbers, the headline PCE price index increased 0.2 percent after gaining 0.3 percent in August. The consensus called for 0.2 percent gain. The core rate slowed to no change from up 0.2 percent in August. The market expectation was for a 0.1 percent rise.

Year-on-year, headline prices are up 2.9 percent, compared to 2.9 percent in September. The core is up 1.6 percent on a year-ago basis, down slightly from 1.7 percent in August.

Today's report is relatively strong-at least for this recovery. Headline income is sluggish but the important wages & salaries component is moderately healthy. Personal spending is robust although price gains played a partial role. Core inflation softened and this gives the Fed room for further accommodation if the FOMC chooses.

On the news, equity futures slipped a bit.

The Employment Cost Index for Q3 rose half that expected at .3%, which is up 2.0% for the year. This measurement includes benefit costs – again everything is measured in dollars then converted into a percentage:

HighlightsGrowth in benefit costs eased substantially in the third quarter and helped to bring down the employment cost index to a quarter-to-quarter plus 0.3 percent in the third quarter from outsized 0.7 percent and 0.6 percent gains in the prior two quarters. The reading is far below the Econoday consensus for plus 0.6 percent. The year-on-year rate slowed to 2.0 percent vs the prior quarters' 2.2 percent and 1.9 percent.

Benefit costs slowed to plus 0.1 percent in the third quarter, down from 1.3 percent and 1.1 percent in the prior two quarters. Wages & salaries rose a respectable 0.3 percent, following a run of 0.4 percent gains. But the year-on-year rate of plus 1.6 percent, the second in a row, is below the core CPI rate of plus 2.0 percent and well below the overall CPI rate of plus 3.9 percent.

Are you dazed and confused yet by how these statistics show supposed growth and yet there is a giant disconnect between them and reality? Money printing coupled with false and misleading statistics is why that disconnect exists, again, we have to collectively stop giving our tacit permission for the lies.

The University of Michigan’s Consumer Sentiment reading just came in at the very depressed level of 60.9, which is higher than the last report of 57.5. This reading, while depressed, is in the opposite direction of the Consumer Confidence reading we just got which is near an all-time low. Not that the “consumer’s” sentiment matters – they are being marginalized more and more.

So, you want to fix Social Security? Guess what, it’s EASY, but only if you remove yourself from the central banker’s debt to control you box. Have you wondered yet why it is that trillions can be created to “shore up the banks,” and yet when it comes to things like Social Security and education there’s no money to be found and “we’re all going to have to take the pain!?”

Uh, huh, sorry, but I don’t give my permission for that whopper of a lie. And let’s be clear, the AARP crowd is right, people have paid into the system for years and years, they deserve to get the benefits that were promised to them! WE all deserve to get something back for what we put in, failing to do so is letting the criminal class abscond with your life’s productive efforts, and that’s called theft!

For decades the surpluses that went into Social Security were moved into the general fund and spent. Spent on what? Stupid things like ridiculous wars, insane “defense” spending, and special interest pandering galore. This is what happens when you give the money production power to a few private individuals, they turn YOUR PRODUCTION (99%) into THEIR GAINS (1%).

So now all that’s left is a phony accounting entry saying that Social Security is owed all that money. And now we have a demographic problem where for the next couple of decades we’re going to be taking in less than is going out – that’s the Ponzi nature of the way the program was created. It is Ponzi because it did not start with assets, payouts were dependent upon current income, and we squandered surpluses instead of saving them. What to do now?

Here’s all that has to be done to fix Social Security, this is best performed inside of the framework of Freedom’s Vision (more on that coming), but is certainly doable at any point, including right now. Are you ready? The ease at which the cure is possible might startle you, but again you must remove your brain from the control-you fear created by the central banker paradigm:

To “unponzify” social security all that must be done is to create 1 trillion sovereign, non debt backed, dollars (more if needed), and then PARK THEM into a new and untouchable Social Security Trust Fund. You then use those dollars to meet obligations while the demographics are unfavorable, and then mandate that during surplus years the fund is rebuilt. No changes to benefits or taxes required.

That’s it, that’s all it takes. Creating this truly sovereign money is NOT inflationary because it is parked (like the current $1.6 trillion “excess reserves are today) – and in fact it acts as a sort of ‘shock absorber’ to the demographic roller-coaster. It took no “PAIN” to create that money, it simply took removing your brain from the debt as money to control you paradigm. In other words, it took not giving permission to the lies. In fact, had it been given the proper reserves and accounting in the first place, it would never have been “Ponzi” from the start.

There are all kinds of true solutions that benefit everyone equally once your mind is outside of the central banker box. I’m going to go there, all the way, in my next series of articles to show you how. I think I see a floor that needs sweeping…